New guidance for agency workers

Today (Monday 9 April) ACAS launched new guidance for agency workers to help them understand their rights and responsibilities.

Hannah King, employment associate, examines why there are so many issues with correctly engaging agency workers and whether this updated guidance will help.

The rights of agency workers are often far from clear because:

Different employment rights and obligations are based on different tests of employment status. Rights may depend on the agency worker being -
• an employee under the Employment Rights Act 1996 (ERA 1996).
• a worker under the ERA 1996 and other legislation.
• "in employment" for the purposes of the Equality Act 2010.
• an "employed earner" under social security legislation.

Also, some legislation deals specifically with agency workers and either grants or excludes certain rights regardless of their employment status.

An agency worker may be an employee or a worker of either the employment business (the agency) or the client (or neither).

There are also rules that apply specifically to agency workers (in some cases, regardless of employment status) to deal with difficulties that may arise out of the tripartite nature of the arrangement and the uncertainties of the agency worker's status.

It is therefore understandably quite confusing for agency workers to actually determine what their rights and protections are.

The Taylor Review highlighted the lack of transparency around some agency worker contracts, particularly relating to pay rates and the use of intermediaries (otherwise called "umbrella companies") for paying wages and making deductions. The review also found that some agency workers at the lower paid, lower skilled end were being forced to use an umbrella company as a condition of getting a job. Umbrella companies normally charge between £15 and £35 per week in administration and "handling" fees, which would be unlawful if made by the agency itself.

Where umbrella companies or other third parties are used, the review found that work-seekers may be provided with insufficient information about the deductions being made from their pay.

ACAS guidance

While the updated guidance ACAS has issued goes someway to providing clarification on some of the basic rights of agency workers, as was clearly identified by the Taylor Review, published on 7 February 2018, there a some fundamental issues with how the agency worker business model is sometimes operated from the outset.

The Taylor Review makes a number of recommendations specifically covering agency workers. The consultation on these recommendations is currently ongoing, but the Review made the following key suggestions which may affect agency workers include (but are not limited to):

The right to a written statement of terms will be extended to all workers. This would clearly set out hours, entitlement to pay, holiday etc.

The right to an itemised payslip will be extended to all workers, and the ERA 1996 will be amended to ensure that such payslips contain sufficient information to allow hourly-paid workers to determine whether they have been paid correctly.

All workers, including agency workers and those on zero hours contracts, should be able to request a "more predictable contract" where appropriate. The government is consulting on how such a right might work, including whether it should be subject to a qualifying period, how long the employer should be given to respond to the request, and whether there should be a limit on the number of requests that an individual can make.

The pay reference period under the Working Time Regulations 1998 for calculating holiday pay for workers without normal hours should be increased from 12 to 52 weeks in order to better take account of seasonal variations in working time.

To improve the transparency of information provided to work-seekers, the government has proposed that a "key facts" page is provided when a work-seeker registers with an employment business. This document would set out which entity is responsible for employing the work-seeker and would highlight any fees they are required to pay to an intermediary, such as an umbrella company.

These recommendations, if implemented, will go much further to ensure that agency workers are provided with clearer information about their basic rights and entitlements to enable them to properly identify if there have been any breaches of these rights.

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